Workers at Allied Signal\'s Specialty

¶ … workers at Allied Signal's Specialty Wax division have experienced two different types of management styles. They have worked through the hard-driving results oriented leadership of Larry Bossidy. This style was focused on quarterly results. Employees were expected to be dedicated to the company at all times, to the detriment of work-life balance. As a result of this, the company became known as a "churn and burn" company, meaning that the company had high turnover as a result of employee burnout. Sandy Lin's management style is oriented towards restoring a work-life balance to the company. The company cannot be said to be a great one for work-life balance, but they have made some small improvements in a few areas.

Bossidy's type a leadership style can be characterized by a number of key facets. The style is oriented towards the short-term. This approach focuses on short-term financial results, but does not take into account the value of long-term corporate growth. This approach is combined with an amoral approach to work-life balance. Bossidy views his role as strictly the agent of the shareholders, with no ethical concerns beyond those which Friedman proposed. This is not uncommon in managerial thinking and Ghoshal (2005) proposed that it this view is actively propagated in business education -- leaders like Bossidy are merely a product of the prevailing view of ethics and morals in modern management culture.

Bossidy's style is that of classic manager. He focuses on structure, division of work, hierarchy, the measurement of results. His approach does not veer towards a bureaucratic model as he uses financial results as the most important measures of success, rather than focusing unduly on inputs. In that way, Bossidy's style differs from the most orthodox classical management theories such as those of Frederick Taylor (Cole, 2004). Bossidy instead adapts some of the fundamental principles of Taylor to Milton Friedman's concepts about the role of business and its leadership in particular (Friedman, 1971). Bossidy views work-life issues as a distraction, something that is not to be considered in his role as agent of the shareholders.

This rigid view of the role of management and the role of workers within the organization has contributed two significant outputs to Allied Signal. The first is the financial results. The company is more than happy to trumpet its 29 consecutive quarters of net income growth over 13%, and this output is indeed impressive from the perspective of the short-term shareholder. The other output, however, is the churn and burn culture within the reputation and the reputation for the same outside of the company. To the extent that the company's culture appeals to workers, it can continue with this culture. However, if the pool of workers willing to enter this environment begins to diminish, then Allied Signal will have difficulty maintaining its success over the long-run. Indeed, there is evidence to support that very few organizations can maintain the high level of intensity that Allied Signal has experienced under Bossidy's leadership over the long run (Bruch & Menges, 2010).

Sandy Lin's approach maintains many of the elements of Bossidy's approach, including the short-term time orientation. However, she lends more freedom to her employees with respect to how they achieve their results. Rather than adopting Bossidy's myopic emphasis on the shareholders, Lin takes a broader stakeholder approach to her management. The customers appear to be more important to her than they were to Bossidy, who was strictly oriented to results regardless of cost. Lin's approach views customers as entities with whom the company would form a longer-term relationship. The emphasis she has placed on work-life balance is not a total overhaul for the organization but it is a move in the right direction.

By taking a broader stakeholder approach, Lin is moving management in the Specialty Wax division towards the human relations school of management. This school emphasizes finding the best ways to maximize motivation and the fulfillment of needs (Cole, 2004). Lin still emphasizes the need to achieve results, but is seeking to reduce the burn and churn element of the company. By taking a more humanist approach to management, she is operating under the assumption that this will keep the employees able to drive results over a longer time period.

It is difficult to determine which of these two approaches works better. Bossidy's approach is predicted to realize results in the short-term but may not be effective over the long-term. However, 29 quarters is over seven years, so there is merit to the argument that Bossidy's approach can be sustained. There are employees that thrive under such working conditions and if the rewards are sufficient, those employees will continue to be attracted to Allied Signal.

There have been studies that show that Lin's more balanced approach is also successful. Employees at successful firms work the same amount of hours as those at unsuccessful firms, but have higher productivity. Thus, they are working smarter rather than harder. Bossidy's approach does imply that harder work is the path to success. Lin realizes that Allied's hard work culture has value, but also realizes that there is value in having the workers work smarter, reducing hours and increasing productivity.

It is worth considering however, that the evidence supports that good management is the most important variable in a company's success. Whether or not a company supports a work-life balance program is ultimately irrelevant to its productivity or its success (Bloom et al., 2006). This goes a long way to explaining why Bossidy's approach succeeded in driving strong quarterly gains over the course of seven years. His attitude towards work-life may have resulted in a high level of employee turnover, but with good management the new employees were able to join the company and be productive quickly, mitigating the negative impacts of the high turnover rate. With good management, Bossidy was able to overcome what should have been a disadvantage in his myopic pursuit of financial measures.